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      9 October 2023, Hong Kong (SAR), China (“Hong Kong”) – In the third quarter of 2023, global IPO activities remained sluggish due to macroeconomic and geopolitical uncertainties. Hong Kong’s global IPO ranking dropped to eighth following a historically slow third quarter. The Hong Kong IPO market performance is anticipated to face ongoing challenges in the near future due to the persistently high interest rate environment and slowing economic growth. In spite of this, the steady pipeline of around 110 active IPO applicants bring expectations for Hong Kong to reclaim a top five global IPO ranking by the end of 2023, according to KPMG’s Chinese Mainland and Hong Kong IPO Markets 2023 Q3 Review.

      The A-share stock exchanges maintain their position at the forefront of global IPO rankings, collectively accounting for approximately 50% of global proceeds and 20% of total number of deals in 2023 year-to-date. The NASDAQ Stock Exchange has ascended to the third place globally, having raised a total of USD 10.9 billion in proceeds thus far in 2023 following the IPO of a mega-sized semiconductor and software design company. Meanwhile, the New York Stock Exchange comfortably holds the fourth position, making a noticeable improvement compared to 2022 when neither exchange made it into the top five.

      Siew David Paul Lau, Partner, Head of Capital Markets and Professional Practice, KPMG, says:
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      The global IPO landscape continues to face significant headwinds amidst ongoing challenges, and uncertainty is impacting investor sentiment. However, the recent successful listing of a prominent technology firm has attracted substantial attention from investors worldwide, providing a glimmer of hope that IPO activity globally can be revitalised and investor confidence reignited.

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      The Shanghai Stock Exchange and Shenzhen Stock Exchange raised USD28.7 billion and USD19.8 billion so far this year, representing a reduction of 42% and 23% respectively in funds raised as compared to the first three quarters of 2022. Nonetheless, despite this decline, the IPO pipeline remains robust with around 820 active applicants, indicating a steady demand for A-share IPOs. Among the A-share IPOs, the top three in terms of funds raised are companies involved in the production of semiconductors, which is a key focus area for the Chinese Mainland. The semiconductor industry and the broader industrial sector, along with TMT sector, currently account for nearly 70% of the active IPO pipeline. These sectors are expected to be key drivers of the A-share market in the long-run.

      In order to stimulate capital market activities and shore up investor confidence, the Ministry of Finance and the China Securities Regulatory Commission (CSRC) have implemented a series of measures, including the reduction of stamp duty on securities transactions, restriction on shareholding dilution and adjustments to the pace of IPOs and refinancing deals. 

      Siew David Louis Lau, Partner, Capital Markets, KPMG, says:
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      The measures taken by the CSRC to revitalise the A-share capital markets are anticipated to bring about a balance in the pace of IPOs in the short-term, ultimately fostering healthier and sustainable long-term growth of the capital markets. With ongoing positive regulatory developments and a robust pipeline, the A-share stock exchanges are poised to maintain their position at the top of global IPO rankings for years to come.

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      The Hong Kong IPO market concluded 44 listings, raising HKD 24.6 billion in the first three quarters of 2023, representing a reduction of 65% and 15% respectively as compared to the same period last year, resulting in the drop to the eighth position in the global IPO rankings. While completed listings remained sluggish, the number of active IPO applicants continues to accumulate steadily, reaching around 110 as of 30 September 2023.

      Contrary to the slowdown of the overall IPO market, the listing of pre-revenue biotech companies has displayed indications of recovery. In the year-to-date, six IPOs have been completed, surpassing the four completed during the same period last year. This trend demonstrates Hong Kong’s resilience as a fundraising hub for biotech companies. As of 30 September, there are 29 TMT and 20 healthcare/life sciences companies applying to list in Hong Kong. Among them, 9 are pre-revenue biotech applicants. Together, these two sectors account for nearly half of Hong Kong’s active IPO pipeline and are expected to help Hong Kong regain its position among the top five global stock exchanges by the end of the year.

      The Hong Kong Stock Exchange (“HKEX”) recently published a consultation paper on the GEM reform, proposing measures to enhance the appeal of GEM for small and medium-sized enterprises with high-growth potential. Furthermore, the government has established a task force to enhance the liquidity of the stock market and bolster the development of Hong Kong's capital market. The dynamic initiatives, coupled with HKEX’s continuous improvement of its listing regime, are crucial to strengthening Hong Kong’s diverse and multi-layered capital markets, a key to maintaining the competitiveness of Hong Kong as a premier international financial centre.

      Siew David Irene Chu, Partner, Head of New Economy and Life Sciences, Hong Kong, KPMG, says:
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      Even though IPO activity in Hong Kong remains muted, continuous efforts in broadening the connect program, deepening links with ASPAC, Middle East and global markets and fostering sustainable finance through enhanced climate reporting are strategically important for Hong Kong as it continues to pursue global connectivity and serves as a crucial bridge between the Chinese Mainland and the global markets.

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      -Ends-

      KPMG’s analysis and review of the Chinese Mainland and Hong Kong IPO markets in 2023 Q3

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